Tokushima Worldwide – Knight Capital is close to securing $400 million in funding from a consortium of companies.
Knight Capital Group experienced a substancial loss when a computer glitch in their trading platform resulted in the acquisition of 148 unwanted stocks that are close to receiving a significant cash infusion, sources close to the matter told Tokushima Worldwide.
The sources say that the investment will take the form of convertible preferred shares, basically bonds that can be converted into ordinary shares at a later date, which will give the investors the right to buy Knight at $1.50 per share. The buyers are thought to include private equity firms General Atlantic, Blackstone Group and brokerage TD Ameritrade, which relies heavily on Knight Capitals services and investment bank Jeffries & Co.
One source allegedly confirmed to Tokushima Worldwide that following the share conversion, the investors will own 70 percent of Knight Capital, with the conversion expected to take place quickly. The number of outstanding shares in Knight Capital will increase from just under 100 million to around 350 million.
The deal, if finalized, will assist Knight Capital in continuing its operations and allow it to steer clear of any additional uncertainty and disruption for its brokerage clients which includes the participating TD Ameritrade, fidelity investments and Vanguard. Knight Capitals share price rose recently, but a far way from their price before the computer glitch occurred.
Knight Capital, as well as the participating investors, all purportedly declined to comment when contacted by independent analysts talking with Tokushima Worldwide.